Good morning. Here’s what we are watching ahead of the market open in Europe:


European earnings take a breather on Friday, with just four constituents of the Stoxx Europe 600 Index due to give updates. In fact, next week is also quieter, in terms of companies releasing numbers, which makes for a good opportunity to review the earnings season so far: “With the third-quarter results season drawing towards a close, Europe has delivered the weakest quarter for earnings surprises since the fourth quarter of 2014, with more companies missing than beating for first time in nearly four years,” Morgan Stanley strategist Matthew Garman wrote in a note Monday. Concern that company profits have hit a peak in the cycle was one of the reasons cited for the tumble seen in stocks last month.

 Chipmakers Choking

Chip stocks are having a tough time. The makers of little components that go inside computers, phones and servers have been struck by fears that tariff wars will hit Chinese demand, while there’s also concern that a data center spending spree — largely driven by Alphabet Inc., Inc. and Facebook Inc. — is coming to an end. There was more grim news in New York last night, as one of the sectors giants, Nvidia Corp., slumped 17 percent following a lackluster earnings report, while another heavyweight, Applied Materials Inc., also dropped following a disappointing  first-quarter forecast.

 Very Angry Birds

Holders of Rovio Entertainment Oy shares might be even more angry than the little birds the company unleashed on the mobile gaming world back in 2009. (Apologies, that was too easy). The Finnish firm’s stock has fallen 61 percent since Rovio’s 2017 initial public offering amid a costly marketing push aimed at proving the company isn’t a one-product wonder. Meanwhile, local media reported this week that one of the Rovio’s co-founders had departed after 15 years at the developer. The company’s quarterly earnings report this morning may not prove reassuring: Rovio narrowed  its full-year revenue forecast, now seeing 280 million euros to 290 million euros, compared with 260 million to 300 million previously.

Unmovable May

U.K. Prime Minister Theresa May will continue with attempts to sell her berated Brexit deal to the public and lawmakers today after remaining defiant in a news conference Thursday evening amid calls for the agreement to be renegotiated, and for her to stand down. More members of her cabinet, including co-leader of the 2016 pro-Brexit campaign, Michael Gove, are reported to be thinking about quitting, following high-profile departures yesterday. The pound was steady against the dollar overnight after declining about 1.5 percent on Thursday.

Tariffs and Tests

If you’re already banking on the U.S.-China tariff war saga coming to an end, you may need to think again. The White House still plans to raise tariffs  on Chinese imports in the new year, according to Commerce Secretary Wilbur Ross, while President Donald Trump and China’s Xi Jinping are likely to, at best, only agree to a “framework” for further talks at an upcoming meeting, he said. Meanwhile, Trump is unlikely to welcome separate news from Asia overnight: North Korean leader Kim Jong Un oversaw the test of a new “advansed tactical” weapon  — the first such demonstration in almost a year — the country’s state-run news outlet reported.


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